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Monday, 1 July 2013

NBN: Problems with Coalition Plan

Moved from index page. Placeholder until rewritten.Problems with Coalition Plan

The media has swallowed and uncritically regurgitated the completely non-credible figures and claims by the Coalition.Whilst the Coalition loudly spruiks VDSL2 as a well-proven & economic technology, it fails to address a very curious and unsettling question:

If VDSL2 & nodes were so very good and economically viable, Why, since 2005, has only one new large development (1400 Appts in Adelaide CBD) been fitted with VDSL2? (Apartment blocks are the cheapest and most profitable Telco installations possible)

The answer is simple: private ISP's & Telcos are not fools, they've run the numbers & they don't work. If VDSL2 + nodes were technically and economically feasible, then with 300,000 apartments constructed between 2006 and 2012, a lot more than 1,400 would've been connected and you'd expect the 5-6 ADSL2 providers to all be involved. VDSL2 hasn't been economic in Australia, why is it economic now?

The Coalition Plan wasn't prepared by any Telecomms experts, nor has its claims, assumptions and figures been assessed by any independent experts. We know this because nobody signed off on its figures. It's a pure political-fiction concocted for headlines and sound grabs.

The "Plan" has all the status and credibility of an undergraduate report thrown together in an all-nighter after a heroic drinking session and should be treated with the same incredulity and scepticism.

The NBN Co plan has a Risks sections, the potential costs and Mitigations.

The Coalition has multiple Drop Dead Risks that are simply ignored.

The NBN Co has a ~10% contingency, $3.6 billion, while the Coalition has none.

Necessary data & details and how the figures were calculated is simply missing, without reason nor justification.

The "Plan" is impossible. It claims to save both Capital Expenditure and Operational Expenditure while it acknowledges copper is much more expensive to maintain.

The only way to save the claimed $17 billion on 9M VDSL services, is if each one doesn't cost anything but they're paid to install it! This is Upside Down thinking and incontestable because all workings are deliberately withheld.

The real savings can only be up to $4 billion, given there no are "surprises" like the recent Fibro/Asbestos pits and Dieldrin/poison issues. If you add additional costs forced onto VDSL subscribers but nobody else, it's more expensive for an inferior service.

The Coalition forces additional uncapped and unknown costs onto VDSL subscribers but then fails to mention this, compounding this by not counting total costs for a valid Apples-and-Apples comparison.

The Coalition stress-tested the current NBN Co plan, a good thing, but failed to stress-test their own "Plan". More importantly, nobody has ever run forecasts for high-growth scenarios, reasonable because all the traffic and take-up figures are running far ahead of projections.

If the CISCO VNI forecasts are correct, NBN Co could be running $10-$12 billion ahead of revenue estimates by 2021. But that's an Inconvenient Truth for the Coalition and overlooked.

The biggest misrepresentation is that it's NOT a plan for a Broadband network any more than a phone network or Cable TV was. The Coalition VDSL/FTTN plan is for a hybrid telephone/DSL network not a pure-digital network like all three other Access Networks being built.

The VDSL/FTTN plan doesn't allow a pure-digital connection nor the provision of the standard Network Termination Device, NTD, supplied in the other three Access Networks.

This would be at least $1,000 per service, if charged at normal retail prices and installed singly, on-requent, not efficiently in a mass-rollout.

VDSL modems are NOT available as Turnbull has stated, for $50". The real price is over $150: we know this because the only VDSL2 service provider sells them for $160.

When challenged on the single biggest Project Risk, Telstra agreement, the Coalition merely asserts "They will". This can only be a true statement if a secret deal has already been struck, which should be declared by the Coalition ahead of the election.

The "Plan" mentions and relies upon vague terms and weasel words: "Cost Effective", "optional Fibre upgrades" and "potential co-funding". These are fictions and will turn out to be "non-core promises". Nobody except Coalition favourites will get publicly-funded Fibre, they are documented as being implacably opposed to the idea.

The Coalition states they are building the VDSL/FTTN network to throw-away, exactly the reason for the sudden U-turn from FTTN to FTTP by the ALP in 2008 on the advice of their Expert Panel. The Coalition then try a smoke-and-mirrors trick of Net Present Value (NPV), that it's cheaper to pay $8 billion up-front, then throw it all away. If you run the NPV calculation with real numbers, going direct to Fibre is cheaper in just 6 years. The FTTN the Coalition propose can never pay for itself in 6 years, it's a bad plan, poorly conceived.